Documenting the African Private Equity and Venture Capital Track Record

Investors who are interested in the African private equity and venture capital space will soon be able to draw lessons from past successful deals sealed on the continent.

The African Venture Capital Association (AVCA) is working on researching and documenting such deals, chief executive Michelle Kathryn Essome, has said.

General absence of records of successful private equity deals has been identified as a key concern for investors interested in doing business in the continent. With such case studies, the investors’ worries would be assuaged.

The promise of superior returns in the continent, and the rest of the emerging markets has been generating growing interest in recent days, with players billing it as the next frontier market for the industry.

Ms Essome told The EastAfrican that the ongoing work on successful case studies is part of her association’s initiatives to promote the industry.

She added that the association is also working on a performance benchmark project with Cambridge Associates that aims at “getting investors to recognise that there are general partners who have delivered exceptional performance.”

“Although one may think that the Africa growth story is one that is well-known, I think there is still quite a bit of work to do to spread this message,” Ms Essome noted.

The association is putting together a database that will have information on general partners, the fundraising trends, deals and exits; is working on launching a monthly newsletter and a pan-African investment activity report, as well as researching on impact investing together with Rockefeller Foundation and Bridges Ventures.

In addition to this, the association is also working on unlocking local sources of capital from pension funds, insurance companies and other institutions; and increasing the level of understanding of the industry on the continent. At the moment, most of the private equity money in Africa is drawn from development finance institutions and other investors from the developed world.

The association, the chief executive said, has been organising private equity workshops for African institutional investors for the past two years, in partnership with the Commonwealth Secretariat and the Africa Development Bank.

“We also need to provide more practical tools for these new investors to the asset,” Ms Essome added.

Recently, AVCA unveiled a new board and advisory council as it attempts to make a comeback after a lull. Last year, the 10-year old association appointed a new chief executive, and signed a memorandum of understanding with the British Venture Capital Association, through which AVCA would be able to tap into the British Venture Capital Association’s expertise and learn from its experience.

In April, the Nairobi-headquartered AVCA hosted its annual conference and annual general meeting in Accra, which Ms Essome describes as “an important part of AVCA’s re-launch.” It brought together 400 delegates, 100 out of whom were limited partners from development finance institutions and other commercial organisations.

The association was started in Cameroon before moving to South Africa and eventually making Kenya its base.

In an earlier interview, Ms Essome said that her organisation’s long term goal is to set up chapters for East, West, North and Southern Africa.